Report: 25 Percent Of Paid-Search Clicks Will Come From Mobile By December

Marin Software has released “The State of Mobile Search Advertising.” It provides yet more evidence of how the search and paid-search markets are being profoundly affected by mobile devices. In almost every category there’s triple-digit growth according to the report, which projects that smartphones and tablets will combine to generate 25 percent of all Google’s paid search clicks in the US by the end of this year.

Marin also estimates that nearly one-quarter (23 percent) of “Google’s US paid-search spend [by December 2012] will come from mobile campaigns.” These are remarkable statements, and it means that Google will be seeing billions in mobile revenue accordingly.

The report incorporates a financial industry (Cowen and Company) projection of Google’s mobile reviews through 2016. While financial forecasts such as this can be notoriously off the mark, mobile will undoubtedly be a massive driver of ad revenue growth for Google over the next several years at least.

Tablets also figure prominently in the future of mobile paid search. Marin reported that at the end of last year tablets accounted for 38 percent of all mobile paid clicks, growing to an estimated 45 percent by the end of this year.

Marin offers some general advice regarding how to allocate budgets in a fragmenting paid search universe: “In the absence of more precise data, the fraction of clicks from tablets versus total mobile clicks is a good proxy for the percent of search budget to allocate towards tablets.” Specific verticals (e.g., retail) may need to pay more attention to tablets than others.

Marin’s client data show that CPCs were lower on mobile devices and CTRs were higher. However mobile conversions were not as strong.

It’s quite possible, as Marin suggests by implication, that mobile conversion data appear the way they do because tracking from smartphones is incomplete. Indeed, a great many conversions driven by mobile search ads may come over the phone or in physical stores — where 95 percent of all conversions actually happen:

Mobile searches often result in conversions that happen via a call or a physical store. Unfortunately, most marketers lack the ability to glue these clicks together into a unified conversion funnel. Marketers should look to estimate their mobile-influenced revenue through the use of popular mobile ad formats such as click-to-call and store-locator. By combining the typical conversion rate for in-store and phone-based transactions with the average revenue per transaction, marketers can estimate a revenue per click for mobile devices, and adjust their mobile CPCs and budget accordingly.

The report includes best practices advice about mobile creative and bidding. In addition, there’s data on international mobile search trends.

Reflecting the growing importance of mobile to search marketers, SMX Advanced in June will feature three mobile sessions covering mobile SEO, mobile SEM and generating and tracking mobile conversions.